MCHP closes within previous day's range after lackluster session
Microchip Technology Incorporated (MCHP) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, MCHP finished the month -3.4% lower at 101.73 after edging lower $0.52 (-0.51%) today, strongly underperforming the Nasdaq 100 (1.78%). Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (MCHP as at Jul 31, 2020):
Friday's trading range has been $2.21 (2.16%), that's below the last trading month's daily average range of $3.22. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for MCHP. Prices continued to consolidate within a tight trading range between 99.75 and 104.37 where it has been caught now for the whole last trading week.
One bullish candlestick pattern matches today's price action, the Hammer.
After having been unable to move above 102.38 in the previous session, Microchip Technology ran into sellers again around the same price level today, failing to move higher than 102.63. The last time this happened on July 17th, MCHP actually gained 1.90% on the following trading day.
Though the market is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might accelerate should prices move above the nearby swing high at 103.19 where further buy stops could get activated. Selling might speed up should prices move below the close-by swing low at 99.75 where further sell stops could get triggered.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Hammer" stand out. Its common bullish interpretation has been confirmed for Microchip Technology. Out of 25 times, MCHP closed higher 60.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 60.00% with an average market move of 1.87%.